FCC's now open to a la carte cable TV

Chairman backs letting customers pick own channels

WASHINGTON (MarketWatch) -- The chairman of the Federal Communications Commission has dropped the agency's opposition to a la carte pricing for cable TV customers, indicating that such a policy could save consumers money and help combat a growing problem with indecency.

Chairman Kevin Martin, reversing a course set by predecessor Michael Powell, told lawmakers on Tuesday that cable subscribers could benefit if given the option to pick individual channels instead of being forced to sign up for predesigned programming packages. Another option would be the creation of "family- friendly" packages.

"I think the industry needs to do more to address parents' legitimate concerns," Martin said at a Senate hearing called to examine broadcast indecency.

A year ago under Powell, the FCC issued a report that concluded most consumers would end up paying more money for cable if operators were required to allow a la carte pricing.

Earlier this year, Martin asked FCC staffers to review the data. They determined the original report relied in part on faulty analysis. The agency's turnabout could add momentum to efforts in Congress to push cable operators to help customers avoid indecent programming.

"His support for a la carte pricing should help push it forward, giving consumers' wallets a break and allowing them more control over their television choices," said Gene Kimmelman of the Consumers Union, publisher of Consumer Reports magazine.

Since taking over from Powell in March, Martin has taken a tougher stance against broadcast indecency, a problem that Powell believed was difficult to define and just as hard to police without express congressional authority.

Indeed, lawmakers have shied away from crafting strict guidelines on what constitutes indecency despite the broadcast industry's clamor for clear rules. Some lawmakers worry that strict guidelines could violate the right to free speech.

Nonetheless, lawmakers, consumer groups and some religious organizations have expressed growing concern about what they see as a rise in sex, violence and graphic behavior on prime-time television. Congress is considering several bills designed to crack down on indecency.

"We're talking about a safe haven for families," said Brent Bozell, president of the Parents Television Council, a broadcast watchdog group.

Some want cable and satellite-TV operators to offer "family-friendly" program packages to give parents more control over what their children watch. Martin supports that goal, noting that operators already offer special packages for movie and sports fans.

Cable and satellite operators could also be subjected to federal rules that ban over-the-air TV and radio operators such as ABC and Clear Channel from broadcasting profanity and sexually explicit content during the hours of 6 a.m. to 10 p.m.

Cable and satellite operators such as DirecTV and Comcast Corp.
CMCSK
are now exempt from such rules.

Anti-a la carte

Kyle McSlarrow, head of the National Cable & Telecommunications Association, said a law forcing operators to offer a la carte pricing is "a very dangerous idea" and likened such an approach to requiring a newspaper to sell news, business and sports sections separately.

He hinted the industry would take its fight to the courtroom if necessary, pointing out that the Supreme Court has struck down some prior iniatives to regulate content on cable TV.

Big cable companies, some of which own a number of channels that create TV shows and movies, said a la carte pricing could kill off some channels by reducing the number of viewers and leading to a decline in advertising revenue.

Moving to a la carte pricing could also force cable companies to spend billions of dollars to replace current settop boxes, thereby raising prices for consumers, they say.

Yet satellite-TV operator EchoStar Communications
DISH, -1.55%
cast a note of dissent, saying it would be glad to offer a family-friendly TV package if programmers ended the practice of "tying" channels.

David Moskowitz, general counsel for EchoStar, said programmers typically require the company to offer less popular channels it might not want to broadcast in return for the right to distribute more popular channels such as ESPN.

While some broadcast executives admitted that the industry wasn't doing an adequate job to curb indecency, they argued that heavy-handed government intervention isn't the answer. Instead, they pointed to technology as the solution.

DirecTV
DTV, -2.12%
and EchoStar, for instance, allow every customer to block any channel they want and to place time limits on how much TV their children watch. Parents can even delete channel listings from satellite-TV guides.

Cable companies are not quite as far along, but they say Congress should not give up on the V-Chip, a government-mandated technology installed on every TV that allows parents to control what their children watch.

Bozell, however, derided the V-Chip as unworkable. He said most parents don't know how to use it and asserted that TV programmers have mostly failed in their duty to give an adequate ratings to every show or movie.

Without an effective rating system, the V-Chip is useless at preventing kids from watching unsuitable programming, he said.

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